Kelowna to B.C.: Dump the Speculation Tax

Rather than offer suggestions about how the province could tweak its new real estate Speculation Tax, Kelowna city council wants the tax gone.

After receiving a recommendation from city staff Monday that suggested a number of ways the province could alter the tax, council sent the issue back for a rewrite to state first and foremost it wants the tax abolished altogether.

On Tuesday, a new motion was suggested to council, stating it write to the provincial government, the Opposition B.C. Green Party and the B.C. Liberal Party indicating the City of Kelowna is “fundamentally opposed to the implementation of a vacancy-based speculation tax in the City of Kelowna, as proposed in Budget 2018.”

It also calls for local consultation to conduct an economic assessment of the potential unintended consequences of the Property Transfer Tax, the Foreign Buyers Tax and the Speculation Tax changes proposed in the budget, and directs the mayor to meet with the premier, finance minister and municipal affairs minister.

“We are hopeful the government has heard the concerns raised about the potential unintended consequences of the speculation tax and ensure the right tools are used to address true speculation,” said Mayor Colin Basran.

He said while the city fully supports the province in addressing the issue of homelessness and housing affordability, concerns over the speculation tax’s impact on the city doesn’t detract from that support.

According to the city, the tax will have many unintended consequences that could hurt the local economy.

“The effects of this may reach beyond the local real estate market and impact the local economy as a whole, due to the associated loss in business, entrepreneurial and commercial investment,” said Kelowna real estate services manager Johannes Saufferer.

On Monday, Basran said he wants to see the province introduce a transaction-based tax on buyers who “flip” residential properties shortly after buying them, as that would have a greater impact on stopping the rise in property prices. Both the Union of B.C Municipalities and West Kelowna—the only other municipality in the B.C. Interior subject to the Speculation Tax—have also called for flipping tax.

In a news release issued Wednesday, Basran said the province has to act to help ease the housing crisis in his city.

“We all agree that the status quo cannot continue,” he said. “Action is needed to improve housing availability and affordability for Kelowna residents. We also know it’s going to take time to address the backlog of housing needs that has built up since the 1990s.”

The city says the federal and provincial governments have the tools and resources to significantly influence housing availability and affordability, both on the demand side, as well as on the supply side.

“Senior levels of government should work with, and consult with, local governments before making changes that directly impact communities. Local governments have a more limited role related to land-use and development approval processing.”

West Kelowna, which has the same concerns as Kelowna, has already stated it wants out of the tax.

Earlier this week, Kelowna city staff said the province’s expansion of the Foreign Buyers Tax and a Luxury Tax the province imposes on higher priced properties will not have much of an impact on Kelowna.